Hailstorms create frequent property and insurance risks for CRE owners. Roof systems are damaged, requiring replacements. Premiums rise, reducing margins.
Risks can also create opportunities, however. And with the right tools and risk management strategies, it is possible to create a hail risk environment that facilitates smart CRE plays.
Reframing the Perspective on Hail Damage
Hail damage is a form of loss and can be taxing: an operations manager calls you in a panic, or you have to get up on the roof yourself. Inspections need to be completed. Claims need to be filed. Vendors need to be procured, hired, and managed. Hail damage causes interruptions that distract from primary responsibilities.
Each element of hail risk: notification, identification, restoration, insurance, and enterprise requires its own set of systems.
Your perspective of hail risk is directly affected by how effective you are at managing these elements.
If your relationship with hail is always feeling caught off guard by storms, occasionally inspecting but not fully understanding damage and its insurance implications, getting denied for confusing reasons, or overpaying for premiums, then hail risk is nothing but painful.
Alternatively, if by installing effective hail notification and identification protocols you can mitigate the risk of accelerated depreciation and understand when insurance-backed restoration opportunities exist across a portfolio — plus pair those opportunities with vendors that minimize restoration management & provide context that enables better coverage choices, hail can sometimes feel like a gift.
Strategic Benefits of Hail Damage Claims for CRE Owners
Insurance is so ubiquitous it feels like a public service, and its necessity creates trepidation when considering a claim — no one wants to pay more or get dropped.
That fear obfuscates the fact that owners are paying, and paying dearly, for a service. Insurance policies are annual contracts, and owners should not be timid to use what they pay for. Loss is loss, and insurance is a marketplace. In the event of non-renewals, owners can take their needs back to the marketplace, this time with healthier assets following a claim.
When considering a specific hail damage event, the decision to file a claim requires due diligence. The analysis should consider deductibles, renewal dates, building conditions, and portfolio strategy, but approved hail damage claims can offer strategic benefits for CRE owners, such as:
- Resetting roof depreciation to $0
- Increasing property values
- Improving tenant relations
- Easier lease-ups
- Reallocation of CapEx
- May reduce premiums
When to Consider an Insurance Claim for Hail Damage
CRE owners should consider filing a claim for hail damage when there is hail damage as defined by their insurance policy on their roof.
This includes catastrophic and functional damage that shortens the lifespan of the roof, but many policies cover damage that is faint or only affects the surface/cosmetic quality of a roof. Once damage has been accurately documented, further analysis can commence.
Notification and identification of hail is more difficult than it would seem, however. There is no standard for hail damage documentation or identification — each carrier defines it differently, and the complexity of hailstorms, building conditions, and insurance create risk for CRE owners.
While severe damage can be easy to identify, damage that requires tests and careful analysis is commonly missed by roofers and general contractors. Depending on the roof system, overlooked damage can increase depreciation of a roof or impact cosmetics — both scenarios could qualify for a full roof replacement. In situations when CRE owners need to replace an aging roof, missing when hailstorms cause damage, even faint damage, can cause owners to spend millions on repairs unnecessarily.
If you are unsure if damage has occurred, you can hire hail experts to document any impacts and help you understand your choices as they relate to your business. With this information, you can balance the potential impacts of filing a claim with the value of an insurance-backed roof replacement.
While hail damage identification is key for hail risk management, comprehensive portfolio risk management programs that also mitigate notification risk, restoration risk, insurance risk, and enterprise risk holistically are the most effective route for portfolio owners.
With these style programs, real estate owners and managers gain a bird's eye view of their entire portfolio and rely on a single vendor, enabling agile action that accounts for both individual property conditions and how they relate to the portfolio as a whole.
Effective programs include:
- Hail Monitoring: hail size and storm alerts based on specific building conditions
- On-Site Inspections: nationwide assessments by hail technicians that understand the intersection of hail damage and insurance.
- Restoration Project Management: Proven processes, partners, and vendors that effectively eliminate the project management burden of hail restoration
- Insurance Expertise: SMEs who understand the intersection of building sciences, insurance, and CRE strategy and provide owners with valuable context to insurance decisions
Conclusion
Equipped with the right knowledge and support, CRE owners or portfolio managers can find silver linings in natural events like hailstorms. Embrace a strategic approach to hail damage and restoration and take control of your hail risk.
See your existing hail exposure and restoration opportunities
